2023 WI 27

SUPREME COURT OF WISCONSIN

CASE NO.: 2020AP225

COMPLETE TITLE: Louis Pagoudis, Hanna Pagoudis, Sead Properties, 

LLC and Kearns Management, LLC,

 Plaintiffs-Appellants,

 v.

Marcus Keidl and Russell K. Berg d/b/a Intervest 

Inspections,

 Defendants,

Amy Keidl a/k/a Amy Jo Weyker,

 Defendant-Respondent-Petitioner.

REVIEW OF DECISION OF THE COURT OF APPEALS

Reported at 399 Wis. 2d. 75, 963 N.W.2d 803

PDC No:2021 WI App 56 - Published 

OPINION FILED: April 4, 2023 

SUBMITTED ON BRIEFS: 

ORAL ARGUMENT: September 9, 2022 

SOURCE OF APPEAL:

COURT: Circuit 

COUNTY: Washington 

JUDGE: Todd K. Martens 

JUSTICES:

KAROFSKY, J., delivered the majority opinion of the Court, in 

which ZIEGLER, C.J., ANN WALSH BRADLEY, DALLET, and HAGEDORN, 

JJ., joined. ZIEGLER, C.J., filed a concurring opinion, in which 

HAGEDORN, J., joined. ROGGENSACK, J., filed an opinion 

concurring in part and dissenting in part. REBECCA GRASSL 

BRADLEY, J., filed an opinion concurring in part and dissenting 

in part.

NOT PARTICIPATING:

 

ATTORNEYS:

For the defendant-respondent-petitioner, there were briefs 

filed by Laura Elaine O’Gorman and Schloemer Law Firm, S.C., 

West Bend. There was an oral argument by Laura Elaine O’Gorman.
2

For the plaintiffs-appellants, there was a brief filed by 

Thomas L. Frenn, James R. Shaw, and Frenn Law Offices, 

Wauwatosa, and James Shaw Law, Brookfield. There was an oral 

argument by Shawn M. Govern. 

An amicus curiae brief was filed by Cori Moore Lamont and 

Wisconsin Realtors Association, Madison, for Wisconsin Realtors 

Association. 
2023 WI 27

NOTICE

This opinion is subject to further 

editing and modification. The final 

version will appear in the bound 

volume of the official reports. 

No. 2020AP225

(L.C. No. 2019CV492)

STATE OF WISCONSIN : IN SUPREME COURT

Louis Pagoudis, Hanna Pagoudis, Sead 

Properties, LLC and Kearns Management, LLC,

 Plaintiffs-Appellants,

 v.

Marcus Keidl and Russell K. Berg d/b/a 

Intervest Inspections,

 Defendants,

Amy Keidl a/k/a Amy Jo Weyker,

 Defendant-Respondent-Petitioner.

FILED

APR 4, 2023

Sheila T. Reiff

Clerk of Supreme Court

KAROFSKY, J., delivered the majority opinion of the Court, in 

which ZIEGLER, C.J., ANN WALSH BRADLEY, DALLET, and HAGEDORN, 

JJ., joined. ZIEGLER, C.J., filed a concurring opinion, in which 

HAGEDORN, J., joined. ROGGENSACK, J., filed an opinion 

concurring in part and dissenting in part. REBECCA GRASSL 

BRADLEY, J., filed an opinion concurring in part and dissenting 

in part.

REVIEW of a decision of the Court of Appeals. Affirmed in 

part, reversed in part, and cause remanded. 

¶1 JILL J. KAROFSKY, J. This case involves a 

residential real estate transaction and a claim that the seller 
No. 2020AP225 

2

misrepresented the condition of the subject property, which has 

given rise to confusion because three legally distinct entities—

—Elias "Louis" Pagoudis, Sead Properties, LLC (Sead LLC), and 

Kearns Management, LLC (Kearns LLC)——conflated their interests 

when filing their complaint. This court now endeavors to 

disentangle those interests and holds that only Sead LLC has 

sufficiently stated a claim upon which relief can be granted. 

Pagoudis's and Kearns LLC's claims against Amy Keidl must be 

dismissed.1

I. BACKGROUND

¶2 We begin by introducing the participants in this real 

estate dispute. Pagoudis owns and is the sole member of two 

LLCs: Sead LLC and Kearns LLC.2 Together, Pagoudis, Sead LLC, 

and Kearns LLC are the plaintiffs in this action and Amy and 

Marcus Keidl, the sellers of a piece of residential real estate 

(the Property), are the defendants.3 

 

1 The Honorable Todd K. Martens of the Washington County 

Circuit Court dismissed the plaintiffs' claims with prejudice. 

We leave it to the circuit court's discretion on remand whether 

to dismiss Pagoudis's and Kearns LLC's claims with or without 

prejudice in light of the analysis herein.

2 The complaint also lists Hanna Pagoudis, Louis Pagoudis's 

wife, as a plaintiff with an interest in both LLCs. The 

complaint treats all of Hanna Pagoudis's claims and rights as 

derivative of her husband's claims through marriage, so this 

opinion focuses only on Louis Pagoudis.

3 The plaintiffs also brought a negligence claim against the 

home inspector, Russell Berg, but that claim was not part of Amy 

Keidl's motion to dismiss and is therefore not before this court 

on appeal.
No. 2020AP225 

3

¶3 We next take a moment to establish which documents we 

are reviewing. The plaintiffs filed a first amended complaint 

after Amy Keidl filed a motion to dismiss, but before the 

circuit court ruled on the motion. With the first amended 

complaint in play, the circuit court granted Amy Keidl's motion 

to dismiss in full. The plaintiffs filed a motion for 

reconsideration while simultaneously filing a second amended 

complaint.4 The circuit court subsequently entered the final 

order granting Amy Keidl's original motion, necessarily denying 

the motion for reconsideration. The plaintiffs appealed this 

final order. As such we treat the first amended complaint, the 

complaint in place when the court initially granted the motion 

to dismiss, as the operative complaint.

¶4 Various other documents were submitted to this court 

either in the record attached to motions or in the appendix to 

appellate briefing. When reviewing a motion to dismiss, we 

generally limit the review to the four corners of the complaint. 

See Andruss v. Divine Savior Healthcare Inc., 2022 WI 27, ¶15, 

401 Wis. 2d 368, 973 N.W.2d 435. The circuit court considered 

two warranty deeds attached to Keidl's motion to dismiss under 

the limited "incorporated-by-reference doctrine." The court of 

appeals upheld the consideration of the warranty deeds, and the 

plaintiffs did not appeal that decision. Thus, we also consider 

 

4 Amy Keidl filed another motion to dismiss relating to the 

plaintiffs' second amended complaint.
No. 2020AP225 

4

these two warranty deeds. We do not consider or rely on any 

other extraneous documents.5

¶5 Now we set out the facts of the purchase and transfer 

of the Property, as alleged in the first amended complaint and 

established by the warranty deeds. Pagoudis negotiated the 

terms of the Property's purchase from the Keidls. During the 

negotiations, he received a real estate condition report (RECR) 

signed by Amy Keidl. Pagoudis then signed the offer to 

purchase, which states that the contract is between the Keidls 

and Pagoudis "or assigns."

¶6 Sead LLC then executed the negotiated contract for the 

Property and took title to it. Less than six months later, Sead 

LLC assigned the Property to Kearns LLC. At the time the 

complaint was filed, Kearns LLC held title to the Property.

¶7 After purchasing the Property, the plaintiffs 

discovered defects that Amy Keidl failed to disclose in the 

RECR. The alleged defects range from water and mildew in the 

basement, to insect infestations, to an unwanted piano.6 The 

plaintiffs brought this action against the Keidls for breach of 

contract, common law misrepresentation, and statutory 

misrepresentation.

 

5 We do, however, read some of the complaint's confusing or 

contradictory language in light of helpful concessions made in 

the plaintiffs' briefing and oral argument.

6 We need not go further into the specifics of the alleged 

defects. At this stage of the proceeding, we accept as true the 

factual allegation that there were material defects in the 

Property that were not disclosed in the RECR.
No. 2020AP225 

5

¶8 Amy Keidl filed a motion to dismiss for failure to 

state a claim upon which relief can be granted pursuant to Wis. 

Stat. § 802.06(2)(a)6 (2019-20)7. The circuit court dismissed 

the case in full, deciding that each of the parties lacked 

standing to pursue their stated claims. The court reasoned that 

Pagoudis and Kearns LLC have no standing because they were not 

parties to the original transaction, and Sead LLC has no 

standing because it transferred the Property before filing the 

action and thus no longer has an interest in the Property. The 

court of appeals reversed, holding that at least one of the 

parties has standing and remanded to the circuit court for 

further factual development to determine which party or parties 

have standing under which claims. We now conclude that 

Pagoudis's and Kearns LLC's claims against Amy Keidl are 

dismissed without further factual development because both 

parties failed to state a claim upon which relief may be 

granted. Sead LLC's claims, however, survive the motion to 

dismiss, and as a result we remand the case to the circuit court 

for further proceedings. 

II. STANDARD OF REVIEW

¶9 A motion to dismiss is reviewed de novo taking all 

well-pleaded factual allegations in the complaint as true and 

drawing reasonable inferences from those facts. Colectivo 

Coffee Roasters, Inc. v. Soc'y Ins., 2022 WI 36, ¶7, 401 Wis. 2d 

 

7 All subsequent references to the Wisconsin Statutes are to 

the 2019-20 version unless otherwise indicated.
No. 2020AP225 

6

660, 974 N.W.2d 442. We do not defer to a complaint's legal 

conclusions. Id. In determining whether this complaint 

survives a motion to dismiss, we look to various statutes, which 

we also interpret de novo. State v. Forrett, 2022 WI 37, ¶5, 

401 Wis. 2d 678, 974 N.W.2d 422.

III. ANALYSIS

¶10 While the circuit court, the court of appeals, and the 

parties view the issue in this case as one of standing, we 

conclude that the question here is really whether each 

plaintiff, based on the plaintiff's unique interest in the 

Property, has sufficiently pled any claim upon which relief can 

be granted pursuant to Wis. Stat. § 802.06(2)(a)6. This case 

does not raise a question of judicial policy but of the 

complaint's legal sufficiency. See McConkey v. Van Hollen, 2010 

WI 57, ¶15, 326 Wis. 2d 1, 783 N.W.2d 855 ("standing in 

Wisconsin is not a matter of jurisdiction, but of sound judicial 

policy"). Although there are many reasons that a claim may not 

survive a motion to dismiss, we limit our review to the narrow 

issue raised and developed on appeal (though stripped of the 

guise of standing). As such, we interpret the issue as whether 

each plaintiff, based on their individual interests in the 

Property, states a claim upon which relief can be granted.

¶11 We determine that, according to the allegations in the 

complaint, only Sead LLC has properly stated a claim upon which 

relief can be granted. We begin by laying out the plaintiffs' 

collective claims. We then summarize some basic principles of 

LLC law in order to establish that each plaintiff's claims must 
No. 2020AP225 

7

be analyzed independently. Finally, we address each plaintiff's 

claims independently and determine that only Sead LLC's claims 

survive the motion to dismiss.

A. The Claims

¶12 The plaintiffs' five claims fall into two categories: 

breach of contract and misrepresentation. The plaintiffs' first 

cause of action alleges breach of contract (warranty). The 

elements of any breach of contract claim are (1) the existence 

of a contract between the plaintiff and the defendant; (2) 

breach of that contract; and (3) damages. Brew City Redev. 

Grp., LLC v. The Ferchill Grp., 2006 WI App 39, ¶11, 289 Wis. 2d 

795, 714 N.W.2d 582. To prove the existence of a warranty, the 

elements are: (1) an affirmation of fact; (2) inducement to the 

buyer; and (3) reliance by the buyer. See Selzer v. Brunsell 

Bros., Ltd., 2002 WI App 232, ¶13, 257 Wis. 2d 809, 652 N.W.2d 

806. When a warranty is found to be part of a contract, false 

representations made as part of the warranty are a breach of the 

contract.

¶13 The plaintiffs' second cause of action is for common 

law intentional misrepresentation. To establish intentional 

misrepresentation, the plaintiffs must show: (1) that the 

defendant made a representation of fact to the plaintiff; (2) 

the representation was false; (3) the plaintiff believed and 

relied on the misrepresentation to the plaintiff's detriment; 

(4) the defendant made the misrepresentation knowingly or 

recklessly, and (5) the defendant did so intending to deceive 
No. 2020AP225 

8

and induce the plaintiff. Tietsworth v. Harley Davidson, Inc., 

2004 WI 32, ¶13, 270 Wis. 2d 146, 677 N.W.2d 233.

¶14 The plaintiffs' third cause of action is for common 

law strict liability misrepresentation. To establish strict 

liability misrepresentation, the plaintiffs must show: (1) the 

defendant made a representation of fact to the plaintiff; (2) 

the representation was false; (3) the plaintiff believed and 

relied on the misrepresentation to the plaintiff's detriment; 

(4) the defendant knew or ought to have known that the statement 

was false; and (5) the defendant had an economic interest in the 

transaction. Ollerman v. O'Rourke Co. Inc., 94 Wis. 2d 17, 25, 

288 N.W.2d 95 (1980).

¶15 The plaintiffs' fourth cause of action is 

misrepresentation under Wis. Stat. §§ 943.20(1)(d) and 895.446.8 

The elements of this claim are: (1) that the defendant made a 

false representation to the plaintiff; (2) the defendant knew 

the representation was false; (3) the defendant intended to 

deceive and defraud the plaintiff; (4) the plaintiff was 

deceived; (5) the plaintiff was defrauded; and (6) the defendant 

obtained money through the sale of property to the plaintiff. 

Ferris v. Location 3 Corp., 2011 WI App 134, ¶8, 337 Wis. 2d

155, 804 N.W.2d 822 (citing Wis. JI-Civil 2419).

 

8 Wis. Stat. § 943.20(1)(d) makes it a crime to "obtain[] 

title to property of another person by intentionally deceiving 

the person with a false representation which is known to be 

false, made with intent to defraud, and which does defraud the 

person to whom it is made." Section 895.446(1) establishes that 

anyone "who suffers damage or loss by reason of intentional 

conduct" prohibited by § 943.20 has a civil cause of action.
No. 2020AP225 

9

¶16 The plaintiffs' fifth and final cause of action is 

misrepresentation under Wis. Stat. § 100.18, often referred to 

as "false advertising."9 The elements of this claim are: (1) the 

defendant made a representation to the public with intent to 

induce an obligation; (2) the representation was untrue, 

deceptive or misleading; and (3) the representation caused the 

plaintiff a pecuniary loss. K & S Tool & Die Corp. v. 

Perfection Machinery Sales, Inc., 2007 WI 70, ¶19, 301 Wis. 2d 

109, 732 N.W.2d 792. 

¶17 In their complaint, the plaintiffs allege their claims 

collectively without distinguishing between Pagoudis, Sead LLC, 

and Kearns LLC's differing interests and involvement in the 

transaction. Importantly, however, the plaintiffs' legal 

interests are not collective as each plaintiff is a separate 

legal entity according to the principles of LLC law. We explain 

some of those LLC principles here to make this conclusion clear.

 

9 The relevant portion of § 100.18(1) reads that "[n]o 

person . . . with intent to induce the public in any manner to 

enter into any contract or obligation relating to the 

purchase . . . of any real estate . . . shall make, publish, 

disseminate, circulate, or place before the public . . . an 

advertisement, announcement, statement or representation of any 

kind to the public relating to such purchase . . . [which] 

contains any assertion, representation or statement of fact 

which is untrue, deceptive or misleading." Section 

100.18(11)(b) establishes that "any person suffering pecuniary 

loss because of a violation of this section" has a civil cause 

of action.
No. 2020AP225 

10

B. LLCs

¶18 Limited Liability Companies are business entities 

created by statute——in Wisconsin, by Wis. Stat. ch. 183.10 

Although an LLC is an association of members, Chapter 183 treats 

LLCs as distinct legal entities separate from their members.

Joseph W. Boucher et al., LLCs and LLPs: A Wisconsin Handbook

§ 4.4. This legal distinction between the interests of LLCs and 

their members is evident in how the chapter governs LLC and 

member property interests (subchapter VII) and the relationships 

between LLCs and their members (subchapter III).

¶19 First, chapter 183 clearly distinguishes the property 

interests of LLC members from the property interests of the LLC. 

See Wis. Stat. § 183.0701(1) ("All property originally 

transferred to or subsequently acquired by or on account of a 

limited liability company is property of the limited liability 

company and not of the members individually."); Wis. Stat. 

§ 183.0701(3) ("Any interest in real property may be acquired in 

the name of a limited liability company and title to any 

interest so acquired shall vest in the limited liability company 

rather than in the members individually."). LLC members have a 

personal property interest in the LLC itself, but do not have an 

 

10 We note that since the appeal of this action, Wis. Stat. 

ch. 183 has been completely repealed and recreated in 2021 WI 

Act 258. Wisconsin Stat. § 183.0110(d)(1)(2021-22) states that 

the 2019 version of chapter 183 shall remain applicable "with 

respect to obligations incurred by the limited liability company 

prior to" the date of applicability of the new chapter, January 

1, 2023. As the obligations in this case were incurred prior to 

January 1, 2023, the 2019 version of chapter 183 applies. 
No. 2020AP225 

11

interest in any specific property owned by the LLC. Wis. Stat. 

§ 183.0703; Wis. Stat. § 183.0701(1). This is true even if a 

member contributed that specific property to the LLC. Wis. 

Stat. § 183.0701(1).

¶20 Second, Chapter 183 defines the relationship between 

an LLC and its members such that a member may act as an agent of 

the LLC, but a member does not share the LLC's liabilities 

solely by virtue of membership. Section 183.0301(1) provides 

that each member of a member-managed LLC11 is an agent of the LLC 

and the acts of members made in the ordinary course of LLC 

business bind the LLC. Additionally, the "debts, obligations, 

and liabilities" of an LLC "shall be solely the debts, 

obligations and liabilities of the [LLC]," and an LLC's member 

"is not personally liable for any debt, obligation or liability" 

of the LLC (subject to a few exceptions that are inapplicable in 

this case). Wis. Stat. § 183.0304(1). This is the "limited 

liability" referenced in the LLC designation.

¶21 Taken together, these statutes establish that LLCs are 

individual entities that are legally separate from their members 

and from other LLCs, regardless of common ownership. Neither 

 

11 LLCs may be either member-managed or manager-managed and 

different statutory rules apply to each designation. The 

default rule is that LLCs are member-managed. Wis. Stat. 

§ 183.0401(1). Since Pagoudis has not alleged otherwise, and 

because he has at times claimed to be acting on behalf of Sead 

LLC, we assume that the default rule applies and Sead LLC is a 

member-managed LLC.
No. 2020AP225 

12

assets nor liability flow freely between the LLC and its members 

simply by virtue of LLC membership.

¶22 Based on these principles, and absent any allegations 

that would otherwise tie their interests together, we must treat 

Pagoudis as distinct under the law from his LLCs. We also must 

treat Sead LLC's interests as distinct from Kearns LLC's 

interests. Pagoudis may have taken some actions on behalf of 

his LLCs as an agent, but that does not mean he can combine his 

interests as an individual with his interests as an agent of an 

LLC. We now turn to the claims at issue with these distinctions 

in mind.

C. The Plaintiffs

¶23 We first explain that, under the allegations in the 

complaint, each of Pagoudis's claims must be dismissed because 

he was not a party to the final contract and did not purchase 

the Property. Then we demonstrate that Sead LLC survives the 

motion to dismiss because, as alleged, it was a party to the 

contract, received representations from the Keidls, and 

purchased the Property. Finally, we establish that Kearns LLC's 

claims must be dismissed because, as alleged, Kearns was not a 

party to the contract and the Keidls made no representations to 

Kearns LLC.

1. Pagoudis

¶24 Although the complaint alleges that Pagoudis 

negotiated and signed the offer to purchase, it does not allege 

that he took title to the Property, and we know from the 

warranty deed and concessions at oral argument that Sead LLC 
No. 2020AP225 

13

purchased and took title from the Keidls. The complaint does 

not specify how this transpired, but it could have happened in 

one of two ways, neither of which would allow Pagoudis to 

establish a claim in his individual capacity. Either: (1) 

Pagoudis negotiated and signed the offer to purchase as an agent 

of Sead LLC; or (2) Pagoudis assigned his rights as an 

individual in the contract to Sead LLC before the purchase was 

completed. 

¶25 Under the first scenario, if Pagoudis acted as Sead 

LLC's agent, then his actions were on behalf of Sead LLC alone 

and he was never a party to the transaction in his individual 

capacity.12

¶26 Under the second scenario, if Pagoudis were acting in 

his individual capacity when he negotiated the contract, then he 

necessarily must have assigned his relevant contract rights to 

Sead LLC before the contract was executed because Sead LLC 

purchased and took title to the Property. If Pagoudis assigned 

his rights in this way, then Pagoudis's rights as an individual 

were extinguished. When one assigns particular rights in a 

contract to another party, their own claims under those assigned 

rights are generally extinguished. Tullgren v. Sch. Dist. No. 1 

of Vill. of Whitefish Bay, 16 Wis. 2d 135, 142, 113 N.W.2d 540 

(1962) (quoting 6 C.J.S. Assignments § 82). Otherwise, any 

 

12 The plaintiffs presented this scenario during oral 

arguments, claiming that Pagoudis was acting as an agent of Sead 

LLC when signing the offer to purchase and that no assignment 

was made.
No. 2020AP225 

14

assignment of contract rights would expand and duplicate 

liability. Thus, whether Pagoudis acted as an agent or assigned 

his contract rights to Sead LLC, Pagoudis did not purchase the 

Property.

¶27 As such, under either scenario, Pagoudis failed to 

state a claim for breach of contract. Pagoudis cannot satisfy 

the first element of a breach of contract claim——the existence 

of a contract between the Keidls and Pagoudis.

¶28 Also, Pagoudis cannot satisfy the third element of a 

breach of contract claim or any of his misrepresentation claims

because he did not purchase the property——the complaint's only 

alleged source of damages. As to his common law intentional and 

strict liability misrepresentation claims, Pagoudis cannot show 

that he believed and relied upon the misrepresentation to his 

own detriment, and thus he cannot satisfy the third element of 

either claim. Even if Pagoudis alleged reliance, it was to Sead 

LLC's detriment, not Pagoudis's. Pagoudis's statutory 

misrepresentation claim must likewise fail under its sixth 

element——that the defendant obtained money through the sale of 

property to the plaintiff——because the Keidls sold the property 

to Sead LLC and not to Pagoudis. Finally, Pagoudis's statutory 

false advertising claim fails under its third element——that the 

representation caused the plaintiff a pecuniary loss. Again, 

the only source of damages or pecuniary loss alleged in the 

complaint stems from the purchase of the property, and Pagoudis 

did not purchase the property.
No. 2020AP225 

15

¶29 Pagoudis argues that because he used personal funds in 

the purchase of the Property, he was in fact the purchaser under 

the contract despite not taking title to the Property. This 

argument is rebutted by Wis. Stat. § 183.0701 which establishes 

that the property acquired by an LLC, including title to real 

property, belongs solely to the LLC and not to the LLC's 

members. The source of the funds is immaterial. In sum, 

Pagoudis has not stated any claim for breach of contract or any 

form of misrepresentation and thus his claims must be dismissed.

2. Sead LLC

¶30 In contrast, Sead LLC's allegations satisfy the 

elements of its breach of contract claim and its 

misrepresentation claims. Sead LLC satisfies the elements of its 

breach of contract claim by alleging: (1) the Keidls entered 

into a contract with Sead LLC which included a warranty or 

representation related to the RECR;13 (2) the Keidls breached 

that contract because those affirmations were false; and (3) 

Sead LLC suffered damages as a result. 

 

13 The complaint alleges that as part of the contract for 

the purchase of the Property, the Keidls "warranted and 

represented that they had no notice or knowledge of conditions 

affecting the Property other than those identified in the 

[RECR]." Although the required language of an RECR as set out 

in Wis. Stat. § 709.03 clearly states that it "is not a warranty 

of any kind," the complaint alleges plausibly that the Keidls 

separately offered a warranty as part of the purchase contract, 

which document is not before this court. Furthermore, Amy Keidl 

did not develop any argument that the plaintiffs failed to 

sufficiently allege the existence of a warranty. As such, we do 

not decide whether the disclaimer of a warranty in § 709.03 

could eventually defeat Sead LLC's breach of contract (warranty) 

claim. 
No. 2020AP225 

16

¶31 Sead LLC's allegations satisfy all of the elements of 

the four misrepresentation claims. Under the intentional 

misrepresentation claim, Sead LLC has alleged: (1) that Amy 

Keidl made a representation of fact to Sead LLC (either through 

its agent, Pagoudis, or through the assigned contract rights) 

that the Keidls did not know of any material property defects 

beyond those disclosed; (2) that such representation was false 

because the Keidls knew of additional material defects; (3) that 

Sead LLC believed and relied on the representations in the RECR; 

(4) that the Keidls knowingly made the false representation; and 

(5) that the Keidls did so intending to deceive and induce Sead 

LLC into purchasing the Property. For the purposes of the 

complaint, the strict liability misrepresentation claim's first 

four elements are the same as the intentional misrepresentation 

claim. In addition to properly alleging those elements, the 

complaint sufficiently alleges that the Keidls had an economic 

interest in the sale of the Property.

¶32 Under the statutory misrepresentation claim, the 

complaint sufficiently alleges that: (1) the Keidls made a false 

representation to Sead LLC that all known material defects were 

reported in the RECR; (2) the Keidls knew the representation was 

false; (3) the Keidls intended to deceive and defraud Sead LLC; 

(4) Sead LLC was deceived; (5) Sead LLC was defrauded; and (6) 

the Keidls obtained money through the sale of property to Sead 

LLC.

¶33 Finally, under the false advertising claim, the 

complaint sufficiently alleges that: (1) the Keidls made a 
No. 2020AP225 

17

representation to "the public" by making representations in the 

RECR to a potential buyer, Sead LLC; (2) the representations 

were untrue; and (3) the representation caused Sead LLC a 

pecuniary loss because it purchased property with more material 

defects than disclosed that will cost money to repair. 

¶34 The circuit court in this case erroneously dismissed 

Sead LLC as lacking standing because Sead LLC no longer held 

title to the Property. Current or continuing possession of 

property is not an element of any of the alleged claims and is 

not a requirement under general standing principles. The 

question is whether Sead LLC suffered damages before 

transferring the Property. Sead LLC has alleged that it 

suffered damages because it paid more for the Property than the 

Property was actually worth. It incurred these alleged damages 

at the point of sale, prior to transferring the Property. 

Furthermore, Sead LLC alleges plausibly that it incurred costs 

in preparing to repair the Property prior to transferring the 

property to Kearns LLC.

¶35 In light of the LLC principles set out above, it is 

important to note that Sead LLC's damages are limited to only 

the damages Sead LLC itself suffered. The court of appeals 

discussed, without deciding, that Kearns LLC and Sead LLC's 

damages might flow between them as a "related party." See

Pagoudis v. Keidl, 2021 WI App 56, ¶33, 399 Wis. 2d 75, 963 

N.W.2d 803. However, LLCs do not become "related" parties 

merely due to common membership or ownership. LLCs are 

individual entities whose benefits and protections stem from 
No. 2020AP225 

18

their legally separate nature. These lines of separation cannot 

be crossed at the whim of the LLC's members only when beneficial

to them. Sead LLC is its own entity, separate from Kearns LLC 

and separate from its member, Pagoudis. Sead LLC must establish 

its own damages.

3. Kearns LLC

¶36 Finally, we turn to Kearns LLC, the current owner of 

the Property. Kearns LLC's breach of contract (warranty) claim 

must be dismissed. It was not a party to the contract with the 

Keidls. The complaint does not allege that Kearns LLC signed 

the offer to purchase the Property or that Kearns LLC was 

assigned any rights under that offer to purchase, nor does it 

allege any other facts that would put Kearns LLC in privity of 

contract with the Keidls.14 As such, it cannot satisfy the first 

element of a breach of contract claim: that a contract existed 

between the Keidls and Kearns LLC.

¶37 Similarly, Kearns LLC's misrepresentation claims must 

be dismissed because the complaint does not allege that the 

Keidls made any representations to Kearns LLC. Therefore, 

Kearns LLC does not meet the first element of its first three

misrepresentation claims——that the defendant made a 

representation of fact to the plaintiff. Furthermore, the 

complaint does not allege that the Keidls made a representation 

 

14 Privity of contract is defined as the "relationship 

between the parties to a contract, allowing them to sue each 

other but preventing a third party from doing so." Privity, 

Black's Law Dictionary 1453 (11th ed. 2019).
No. 2020AP225 

19

of fact to Kearns LLC as a member of "the public" under the 

first element of a false advertising claim.15

¶38 Stated another way, under the facts alleged in the 

complaint, Sead LLC——not the Keidls——is the only party that 

could have made representations regarding the current status of 

the Property to Kearns LLC before Kearns LLC took title to the 

property. Therefore, any claim for misrepresentation Kearns LLC 

may hold would have to be brought against Sead LLC.

¶39 The plaintiffs argue that Kearns LLC can nevertheless 

satisfy the elements of their misrepresentation claims under a 

theory of third-person misrepresentation as set out in the 

Restatement (Second) of Torts § 533. The Restatement (Second) 

of Torts § 533 states:

The maker of a fraudulent misrepresentation is subject 

to liability for pecuniary loss to another who acts in 

justifiable reliance upon it if the misrepresentation, 

although not made directly to the other, is made to a 

third person and the maker intends or has reason to 

expect that its terms will be repeated or its 

substance communicated to the other, and that it will 

influence his conduct in the transaction or type of 

transaction involved.

This section cannot apply under the facts of this case because 

the Keidls did not have a reason to expect that their 

 

15 Although representations to a potential real estate 

purchaser have been considered representations to "the public" 

in Below v. Norton, under these facts, only the purchaser 

received those representations from the Keidls. See Below v. 

Norton, 2008 WI 77, ¶¶5-6, 310 Wis. 2d 713, 751 N.W.2d 351.
No. 2020AP225 

20

representations in the RECR would be repeated and relied upon by 

Kearns LLC.16 

¶40 A decision that the Keidls had reason to expect the 

representations in the RECR would reach and be relied on by a 

subsequent buyer would run contrary to Wisconsin's RECR 

statutes. Wisconsin Stat. § 709.02(1) requires that sellers of 

residential real estate furnish a completed RECR under Wis. 

Stat. § 709.03 to "the prospective buyer." The statutorily 

provided form states that "[t]he owner discloses the following 

information with the knowledge that, even though this is not a 

warranty, prospective buyers may rely on this information in 

deciding whether and on what terms to purchase the property." 

Wis. Stat. § 709.03 A6. These statutes clearly set out the 

reasonable expectation regarding who may rely on an RECR. 

¶41 Only a "prospective buyer" may be expected to rely on 

the RECR. Sections 709.02 and 709.03 are closely related 

statutes with direct cross references between them and thus a 

plain reading of the statutes assigns a consistent meaning to 

the term "prospective buyer" in both sections. See United Am., 

LLC v. Wis. Dep't of Transp., 2021 WI 44, ¶6, 397 Wis. 2d 42, 

959 N.W.2d 317 ("Common meaning is derived in part from the 

statutory context in which the terms are used. That includes 

the terms' usage in relation to the language of closely related 

statutes[.]" (internal citations omitted)). In Wis. Stat. 

 

16 We do not decide whether Restatement § 533 may be adopted 

by a future court under different factual allegations.
No. 2020AP225 

21

§ 709.02(1), "prospective buyer" refers specifically to a buyer 

already in contract with the seller. Wis. Stat. § 709.02(1) 

("[T]he owner of the property shall furnish, not later than 10 

days after acceptance of a contract of sale or option contract, 

to the prospective buyer of the property a completed copy of the

report under s. 709.03 . . . ."). Thus, although the term 

"prospective" could indicate simply any "future" buyer,17 the 

term "prospective buyer" in the context of the statute must be 

limited to a future buyer within the specific transaction at 

issue. To extend liability to any future buyer in a different 

transaction with a different seller would be contrary to the 

plain language of the statute and would create endless potential 

liability for home sellers. It is evident that the statutes 

establish that a seller must reasonably expect reliance by only 

the prospective buyer in the current transaction.

¶42 As there can be no reasonable expectation of thirdparty reliance stemming from an RECR, and the Keidls made no 

direct representations to Kearns LLC, Kearns LLC cannot maintain 

any of its misrepresentation claims. In sum, all claims by 

Kearns LLC must be dismissed. 

IV. CONCLUSION

¶43 Sead LLC's claims survive this Wis. Stat. 

§ 802.06(2)(a)6. motion to dismiss, which we interpret as 

challenging the sufficiency of the complaint based on the 

 

17 Prospective is defined as "effective or operative in the 

future." Prospective, Black's Law Dictionary 1477 (11th ed. 

2019).
No. 2020AP225 

22

identity of the plaintiff. Amy Keidl's motion to dismiss must 

be granted as to Pagoudis and Kearns LLC as they have not stated 

any claim upon which relief can be granted.

By the Court.—The decision of the court of appeals is 

affirmed in part, reversed in part, and the cause is remanded to 

the circuit court for further proceedings consistent with this 

opinion.
No. 2020AP225.akz

1

¶44 ANNETTE KINGSLAND ZIEGLER, C.J. (concurring). I 

agree that both Pagoudis and Kearns must be dismissed, and I 

reiterate both that I would not adopt the Restatement (Second) 

of Torts § 533 and that an LLC is indeed a separate and distinct 

entity from its members. Furthermore, based upon the Amended 

Complaint, concessions at oral argument by Pagoudis's counsel, 

and warranty deeds undisputedly incorporated into the Amended 

Complaint, dismissal of Pagoudis is appropriate. I write 

separately to emphasize the limited scope of our review at the 

motion to dismiss stage with regard to Pagoudis's claims brought 

in his personal capacity and the unique facts of this case that 

bear upon that question.

¶45 "When we review a motion to dismiss, factual 

allegations in the complaint are accepted as true for purposes 

of our review." Data Key Partners v. Permira Advisers LLC, 2014 

WI 86, ¶18, 356 Wis. 2d 665, 849 N.W.2d 693. We "derive all 

reasonable inferences from those facts" and "construe those 

facts and inferences in the light most favorable to the 

plaintiff." Preston v. Meriter Hosp., Inc., 2005 WI 122, ¶13, 

284 Wis. 2d 264, 700 N.W.2d 158. Though "a court cannot add 

facts in the process of construing a complaint," Data Key 

Partners, 356 Wis. 2d 665, ¶19, a court may, in limited 

circumstances, consider facts outside the four corners of the 

complaint under the "incorporation-by-reference" doctrine. "The 

incorporation-by-reference doctrine 'prevents a plaintiff from 

"evad[ing] dismissal . . . simply by failing to attach to his 

complaint a document that prove[s] his claim has no merit."'" 
No. 2020AP225.akz

2

Soderlund v. Zibolski, 2016 WI App 6, ¶38, 366 Wis. 2d 579, 874 

N.W.2d 561 (quoting Brownmark Films, LLC v. Comedy Partners, 682 

F.3d 687, 690 (7th Cir. 2012)) (alterations in original). 

¶46 The plaintiffs' Amended Complaint alleges, "SEAD 

PROPERTIES, LLC . . . purchased the Property from the 

DEFENDANTS."1 The Amended Complaint also alleges the "[P]roperty 

was purchased with mar[it]al funds" and that "Pagoudis entered 

into a contract with [the Keidls] for the purchase of the 

Property, which was intended to be their permanent residence 

with their children." As the court of appeals put it, these 

pleadings are "hardly a model of clarity." Pagoudis v. Keidl, 

2021 WI App 56, ¶36, 399 Wis. 2d 75, 963 N.W.2d 803. Without 

more, one might read the Amended Complaint as not clearly 

establishing whether it was Pagoudis, in his personal capacity, 

or Sead that received representations about the property causing 

the purchase. 

¶47 Ordinarily, in a motion to dismiss, we would construe 

the pleading in a light most favorable to the nonmoving party 

without resort to any extrinsic sources. One might be able to 

conclude that Pagoudis cannot yet be dismissed because the 

pleadings sufficiently allege that Pagoudis individually was the 

initial purchaser to whom misrepresentations were made and that 

those misrepresentations caused him to decide to purchase 

property and assign it before closing. However, that 

interpretation was directly repudiated by his counsel at oral 

 

1 The plaintiffs also filed a second amended complaint. We 

review only the first amended complaint because the plaintiffs 

appealed from the order dismissing that complaint. 
No. 2020AP225.akz

3

argument. Perhaps this is because Sead is reflected as the 

owner on the warranty deed.

¶48 Typically we would not consider anything other than 

the complaint in our analysis. However, Keidl actually attached 

two warranty deeds to the motion to dismiss. The circuit court 

considered both of these documents. The court of appeals upheld 

that consideration as proper under the incorporation-byreference doctrine, and neither party appealed this 

determination or argues that this was improper. The first 

document was the deed from the initial purchase transfer from 

the Keidls to Sead, and the second was the deed transferring the 

Property from Sead to Kearns. Relevant to our determination, 

however, is the first warranty deed, as it concerns the initial 

purchase of the Property. The deed from the initial transfer 

states, "This Deed[ is] made between Marcus J. Keidl and Amy J. 

Keidl . . . and Sead Properties LLC." It conveyed the Property 

directly from the Keidls to Sead, "[t]ogether with all and 

singular the hereditaments and appurtenances thereunto 

belonging." 

¶49 Pagoudis's counsel conceded at oral argument that 

Pagoudis was not acting as an individual but instead acted only 

as an agent for his LLC in the transaction and that any 

misrepresentations were made to those LLCs through Pagoudis.2 

 

2 We may accept such concessions for purposes of resolving a 

motion to dismiss. See Wis. Mfrs. & Com. v. Evers, 2022 WI 38, 

¶17 n.10, __ Wis. 2d __, 977 N.W.2d 374 (accepting a concession 

at the motion to dismiss stage); DeBruin v. St. Patrick 

Congregation, 2012 WI 94, ¶4 n.5, 343 Wis. 2d 83, 816 N.W.2d 878 

(same); Penterman v. Wis. Elec. Power Co., 211 Wis. 2d 458, 480-

81, 565 N.W.2d 521 (1997) (same). 
No. 2020AP225.akz

4

Responding to questions about whether the complaint states a 

claim for Pagoudis individually or Pagoudis as a member of Sead, 

counsel stated, 

The fact of the matter is Louis Pagoudis was on the 

contract. Louis Pagoudis is the managing sole member 

of both of the LLCs. He's an agent by definition 

under [§] 183 because the LLC acts through its members 

and its managing members are authorized. And so, at 

the end of the day, I believe these LLCs are the 

recipients of the misrepresentation.[3]

¶50 Counsel was next questioned about how Pagoudis 

"personally could suffer damages simply because [he is a] member 

of an organization that purchased a property." Counsel 

responded, "[T]here are losses that are related to diminution of 

value . . . . The sole members, their value in the LLC is tied 

to the profits and losses in the values of the assets." Counsel 

admitted that the only damage Pagoudis suffered was through his 

interest in the LLC. There is no allegation that Pagoudis 

personally suffered damages unrelated to his LLC interest.4 

 

3 Counsel also later conceded that Pagoudis "took title 

through an LLC."

4 Although LLC members may be monetarily affected by the 

successes and failures of the distinct legal entity, the LLC, 

the treatment of the LLC remains the same regardless of the 

composition of its members. To say otherwise would blur the 

line between an LLC and its members. The protections afforded 

do not fluctuate depending on advantages given a particular 

situation. Cf. Notz v. Everett Smith Grp., Ltd., 2009 WI 30, 

¶20, 316 Wis. 2d 640, 764 N.W.2d 904 (footnote omitted) 

(citation omitted) ("[A] right of action that belongs to the 

corporation cannot be pursued as a direct claim by an individual 

stockholder. . . . [E]ven where the injury to the corporation 

results in harm to a shareholder, it won't transform an action 

from a derivative to a direct one . . . ."); 54 C.J.S. Limited 

Liability Companies § 64 (2023) ("The principles of derivative 

lawsuits applicable to corporations likewise apply to limited 

liability companies."). 
No. 2020AP225.akz

5

Counsel's admissions demonstrate that Pagoudis only ever acted 

through his LLC, never in his personal capacity.

¶51 Based on counsel's admissions at oral argument and the 

warranty deed, Sead was the initial purchaser and took title 

directly from the Keidls. Pagoudis, in his personal capacity, 

never individually purchased or owned the Property and therefore 

had no claims to assign. For these reasons, the claims brought 

in Pagoudis's personal capacity are properly dismissed. 

¶52 For the foregoing reasons, I respectfully concur. 

¶53 I am authorized to state that Justice BRIAN HAGEDORN 

joins this concurrence.
No. 2020AP225.pdr

1

¶54 PATIENCE DRAKE ROGGENSACK, J. (concurring in part, 

dissenting in part). Louis Pagoudis, Sead, LLC (Sead) and 

Kearns Management, LLC (Kearns) assert claims against Marcus and 

Amy Keidl (the Keidls) based on their sale of "the Property." 

The majority improperly dismisses Pagoudis's and Kearns's claims 

based on its conclusion that in regard to those two plaintiffs, 

the Amended Complaint fails to state a claim upon which relief

can be granted.1 

¶55 Because the Amended Complaint alleges facts that, if 

proved true, state tort claims for intentional 

misrepresentation, strict liability for misrepresentation, 

violations of Wis. Stat. §§ 895.446 and 943.20 and false 

advertising pursuant to Wis. Stat. § 100.18, by the Keidls, 

Pagoudis and Kearns should be permitted to proceed further in 

developing facts relevant to those tort claims.2 

¶56 Furthermore, as I explain below, such claims generally 

are assignable. However, the Amended Complaint does not allege 

that they were assigned to either Sead or Kearns and therefore, 

they likely remain with Pagoudis. And finally, if Sead or 

Kearns are worth less than the dollar amount that Pagoudis 

placed into them due to actions of the Keidls, the value of his 

personal property interests in those entities may have been 

injured. We simply can't determine where the ultimate injury 

 

1 Majority op., ¶8. 

2 Essentially, Pagoudis's claim is for fraud in the 

inducement based on those alleged torts. 
No. 2020AP225.pdr

2

may lie based solely on the Amended Complaint. Accordingly, 

because the possibilities in regard to injury and valuation are 

myriad, I would affirm the court of appeals, and I respectfully 

dissent from the majority opinion's dismissal of claims made by 

Pagoudis and Kearns. 

I. BACKGROUND

¶57 The Amended Complaint alleges that Pagoudis contracted 

with the Keidls to purchase the Property.3 Although Pagoudis, 

Sead and Kearns are listed as "Plaintiffs" in the Amended 

Complaint, with few exceptions, the paragraphs of the Amended 

Complaint refer to "plaintiff" in the singular form, allege 

facts occurring before the closing on the sale of the Property 

when Pagoudis was the only actor and allege financial outlays 

that Pagoudis made subsequent to closing. In sum, the 

allegations in the Amended Complaint are written as though from 

Pagoudis's perspective.4

¶58 In making his decision to purchase, Pagoudis relied on 

the "Real Estate Condition Report" (RECR) that was prepared by 

Amy Keidl and dated February 1, 2017.5 The RECR shows that 

Pagoudis acknowledged its receipt on March 11 or 17, 2017.6 

Although the accepted offer to purchase is not part of the 

record before us, the parties seem to agree that Pagoudis signed 

 

3 Amended Complaint, ¶5. 

4 E.g., id., ¶¶5, 6, 8, 10-12, 18, 31-36, 40. 

5 Id., ¶1, referencing the attached RECR, ¶6. 

6 Id., RECR attached to the Amended Complaint has an unclear 

date of receipt by Pagoudis. 
No. 2020AP225.pdr

3

it with some indication on the document that he could assign the 

interest he was obtaining.7

¶59 Prior to closing, the Keidls represented that they had 

no knowledge of defects, including, but not limited to basement 

water leaks or mold or fungus being present in the Property.8 

Pagoudis found those and other defects subsequent to closing, 

and he contacted experts who informed him that those defects 

existed while the Keidls owned the property.9 Therefore, 

Pagoudis contends that the Keidls knew of the defects.10 

¶60 Pagoudis asserts that the Keidls failed to disclose 

material facts with the intent to deceive and to induce him to 

act in reliance on their deception.11 He asserts the Keidls made 

representations about the condition of the Property that were 

untrue, with the intent to sell the Property.12 Because of the 

Keidls' failure to disclose defects in the Property, Plaintiffs 

suffered economic damage.13 

¶61 Sead Properties, LLC is a Wisconsin limited liability 

company.14 As Pagoudis's likely assign, Sead took title to the 

 

7 The accepted offer to purchase was not submitted at the 

circuit court. It was improperly attached to Plaintiffs' 

appendix at the court of appeals. 

8 Amended Complaint, ¶9. 

9 Id., ¶11.

10 Id., ¶13. 

11 Id., ¶22. 

12 Id., ¶38. 

13 Id., ¶29. 

14 Id., ¶2. 
No. 2020AP225.pdr

4

Property from the Keidls.15 Pagoudis is the sole member of 

Sead.16 Kearns is a Wisconsin limited liability company that is 

solely owned by Pagoudis.17 Sead assigned its interest in the 

Property to Kearns.18 The Amended Complaint says nothing about 

Pagoudis assigning his tort claims to Sead or Kearns. 

¶62 The circuit court dismissed the Amended Complaint as 

to all parties. It concluded that the Amended Complaint did not 

state a claim for Pagoudis, Sead, or Kearns. The court of 

appeals reversed and reinstated the Amended Complaint in regard 

to Pagoudis, Sead, and Kearns.19 It concluded that the Amended 

Complaint could not be dismissed without further factual 

development.20 

 

15 Id., ¶2. It is agreed that Sead took title to the 

Property, even though that fact is not alleged in the Amended 

Complaint.

16 Id., ¶2. 

17 Id., ¶3. 

18 Id., ¶3. 

19 Pagoudis v. Keidl, 2021 WI App. 56, ¶2, 399 Wis. 2d 75, 

963 N.W.2d 803. 

20 Id. 
No. 2020AP225.pdr

5

II. DISCUSSION

A. Standard of Review

¶63 Upon review of this motion to dismiss, we begin by 

accepting all well-pleaded facts and their reasonable inferences 

in the Amended Complaint. Data Key Partners v. Permira Advisers 

LLC, 2014 WI 86, ¶19, 356 Wis. 2d 665, 849 N.W.2d 693. "[L]egal 

conclusions asserted in a complaint are not accepted, and legal 

conclusions are insufficient to withstand a motion to dismiss." 

Id., ¶18. Furthermore, "a court cannot add facts in the process 

of construing a complaint." Id., ¶19. Whether the alleged 

facts state a claim for relief is a question of law that is 

subject to our independent review. Id., ¶17. 

¶64 The pending dispute requires us to interpret and apply 

statutes, which also present questions of law that we 

independently decide. Townsend v. ChartSwap, LLC, 2021 WI 86, 

¶11, 399 Wis. 2d 599, 967 N.W.2d 21. 

B. Claim Ownership

¶65 In order to answer the questions presented by the 

motion to dismiss, it is helpful to understand the relationships 

between Pagoudis and the two limited liability companies, Sead 

and Kearns. See Marx v. Morris, 2019 WI 34, 386 Wis. 2d 122, 

925 N.W.2d 112. 

1. General LLC Principles

¶66 Wisconsin limited liability companies are entities 

that were created by Wis. Stat. ch. 183.21 They commonly are 

 

21 Wisconsin Stat. ch. 183 recently was repealed and 

recreated, with revisions effective January 1, 2023 unless the 

obligation at issue occurred prior to that date. Wis. Stat. 
No. 2020AP225.pdr

6

used in Wisconsin because of their flexibility and the personal 

liability shield they provide for members who conduct business 

by the use of an LLC. 

¶67 LLCs are formed by filing articles of organization 

with the Department of Financial Institutions to give notice of 

their existence. Wis. Stat. § 183.0201; Joseph W. Boucher et 

al, LLCs and LLPs: A Wisconsin Handbook, § 1.6 (6th ed. 2018). 

Generally, members create a contract, the operating agreement, 

which sets out an LLC's mode of operation. Id., §§ 1.6, 3.60. 

¶68 Due to the desire for flexibility of operation, many 

provisions in Wis. Stat. ch. 183 furnish default rather than 

mandatory rules for an LLC. "However, all the default rules 

apply unless an operating agreement unambiguously states 

otherwise." Marx, 386 Wis. 2d 122, ¶27. 

¶69 Members make contributions to the capital of the LLC 

in exchange for their ownership interest in it. LLCs and 

LLPs: A Wisconsin Handbook, supra, at § 4.8. Contributions 

traditionally consist of property or cash or services, and the 

operating agreement states the value of each member's 

contribution. Wis. Stat. § 183.0501. 

¶70 A member's ownership interest in an LLC is personal 

property. Wis. Stat. § 183.0703. Therefore, even if a member 

obtains his or her interest in the LLC by contributing real 

estate to the LLC, once contributed, that individual's interest 

in the real estate ends. Wis. Stat. § 183.0701(1); LLCs and 

LLPs: A Wisconsin Handbook, supra, at § 4.4. In exchange, the 

 

§ 183.0110(d)(1) (2021-22). 
No. 2020AP225.pdr

7

member obtains a personal property interest in the LLC. 

§ 183.0703; LLCs and LLPs: A Wisconsin Handbook, supra, § 4.4. 

2. Pagoudis, Sead, and Kearns

¶71 The operating agreement for neither Sead nor Kearns is 

in the record. Therefore, at this point in the litigation, we 

proceed based solely on the factual allegations contained in the 

Amended Complaint, which we accept as true for purposes of Amy 

Keidl's motion to dismiss. Data Key Partners, 356 Wis. 2d 665, 

¶19. 

¶72 The assignment of the contractual right to take title 

to the Property, which apparently was executed in favor of Sead, 

also is not in the record.22 Therefore, we cannot tell whether 

Pagoudis assigned simply the right to take title to the Property 

or also assigned his tort claims. However, the Amended 

Complaint does not allege tort claim assignment.

¶73 We addressed a similar concern in Chimekas v. Marvin, 

25 Wis. 2d 630, 131 N.W.2d 297 (1964), which was relied on in 

part by the court of appeals.23 There, Chimekas contracted with 

 

22 The parties seem to agree that Pagoudis contracted to

purchase the property for himself "or assigns." However, the 

accepted offer to purchase was not submitted while this matter 

was before the circuit court and no document actually making an 

assignment from Pagoudis to Sead is in the record. However, 

paragraph 2 of the Amended Complaint says, Sead "purchased the 

property from the DEFENDANTS." This may be a conclusion of law 

to which we owe no deference if Pagoudis paid for the property 

to which Sead took title. See Davis v. Buchanan Cnty., Mo., 

5 F.4th 907, 911 (8th Cir. 2021). At this point in the 

litigation, we simply don't have complete factual development. 

23 Pagoudis, 399 Wis. 2d 75, ¶36. 
No. 2020AP225.pdr

8

Marvin to purchase residential property. As "an inducement for 

the Chimekas entering into the contract the defendants knowingly 

falsely represented and warranted that the basement was dry and 

waterproof; in fact it was not dry or waterproof." Id. at 631. 

Chimekas assigned all of their contractual rights to Chaloupkas 

by gift and both sued Marvin for damages for fraud. Id. 

¶74 The trial court dismissed the action, concluding that 

once Chimekas transferred their interest to Chaloupkas they had 

no damages, and Chaloupkas had no damages because a cause of 

action for fraud is not assignable. Id. at 631-32. We 

explained, as we reversed the trial court, that Chimekas' 

assignment to Chaloupkas of the contractual right to purchase 

the property "is not an allegation that the former assigned 

their tort cause of action for fraud to the latter." Id. at 

632. In concluding that Chaloupkas was not an assignee of the 

fraud claim, we further explained that the "accepted test of 

assignability of a cause of action is whether it survives the 

death of a party." Id. at 632-33 (citing P.C. Monday Tea Co. v. 

Milwaukee Cnty. Expressway Comm'n, 24 Wis. 2d 107, 111, 128 

N.W.2d 631 (1964) (further citations omitted)). Furthermore, "a

cause of action for deceit in inducing a conveyance of real 

estate survives the defrauded party's death. Such a cause of 

action, therefore, is assignable." Chimekas, 25 Wis. 2d at 633. 

However, Chimekas making a gift of their right to own the 

property does not affect the issue of whether Chimekas sustained 

 

The majority opinion never mentions Chimekas v. Marvin, 25 

Wis. 2d 630, 131 N.W.2d 297 (1964), even though the court of 

appeals and I have used it in our opinions. 
No. 2020AP225.pdr

9

damages because of defendants' alleged false representations. 

Id. Therefore, we concluded that the complaint stated facts 

that were sufficient to constitute a tort cause of action in 

fraud for Chimekas. Id.

¶75 Here, as in Chimekas, Pagoudis's tort claims against 

the Keidls could have been assigned to Sead because they 

generally are assignable claims. Id. at 633. However, there is 

no allegation in the Amended Complaint that Pagoudis did assign 

them. Therefore, at this point in the litigation, Pagoudis may 

well hold those claims. 

¶76 The majority analysis is confused because it does not 

recognize that Pagoudis's claims are tort claims against the 

Keidls. Although breach of contract is alleged, cut to the 

quick, the Amended Complaint alleges fraud in the inducement to 

purchase real estate. The majority opinion also does not

recognize that the Amended Complaint controls our analysis. 

¶77 Pagoudis did not allege in the Amended Complaint that 

he assigned his tort claims to anyone. The majority opinion 

says that if Pagoudis negotiated the purchase of the Property as 

an individual and assigned his contract rights to Sead, 

"Pagoudis's rights as an individual were extinguished."24 The 

majority goes on to opine that "When one assigns particular 

rights in a contract to another party, their own claims under 

those assigned rights are generally extinguished."25 It cites 

 

24 Majority op., ¶26.

25 Id. 
No. 2020AP225.pdr

10

Tullgren v. Sch. Dist. No. 1 of Vill. of Whitefish Bay, 16 

Wis. 2d 135, 142, 113 N.W.2d 540 (1962), for that assertion.

¶78 Tullgren says it is based on an "unqualified" 

assignment of contract rights. Id. at 141-42. Here, an 

"assignment" from Pagoudis is not in the record so we do not 

know if there is a document that sets the terms of the 

assignment. Perhaps it was unqualified; perhaps not. The 

record is silent. 

¶79 Also, Tullgren is based on a contract claim. And, 

although the Plaintiffs made a breach of contract claim, the 

central dispute in regard to Pagoudis is based on fraud in the 

inducement, which is a tort claim. Tullgren provides no support 

for the conclusion that Pagoudis's tort claims are 

extinguished.26 

¶80 Chimekas is on all fours with the dispute before us. 

It is grounded in the principle that transferring ownership in a 

property does not transfer tort claims unless the owner of the 

tort claim so alleges. Chimekas, 25 Wis. 2d at 633. In the 

dispute before us, the Amended Complaint does not allege that 

Pagoudis assigned his tort claims against the Keidls. 

¶81 Kearns now has title to the property.27 However, there 

is nothing in the Amended Complaint that alleges that Pagoudis 

assigned his tort claims to Sead, who then assigned them to 

 

26 Without the assignment from Pagoudis to Sead, it is also 

not possible to determine whether it was "unqualified" in regard 

to contract rights. 

27 Amended Complaint, ¶3. 
No. 2020AP225.pdr

11

Kearns when Sead assigned its ownership rights in the Property. 

It simply alleges Kearns is a Wisconsin LLC to which Sead 

assigned the Property.28

¶82 Under Wisconsin law, LLCs operate under the entity 

theory such that each LLC is an individual entity. Gottsacker 

v. Monnier, 2005 WI 69, ¶14, 281 Wis. 2d 361, 697 N.W.2d 436. 

Therefore, their interests may not be conflated into one entity 

even though Pagoudis solely owns both Sead and Kearns. 

¶83 As we also do not have the operating agreements for 

Sead or Kearns, we do not know exactly what Pagoudis contributed 

to either one. Therefore, we cannot ascertain with certainty 

whether either suffered injury due to the Keidls' interactions 

with Pagoudis. And finally, if Pagoudis transferred only his 

contractual interest in the Property to Sead based on the sale 

contract's stated value and if that value, while held by Sead, 

diminished, Pagoudis's personal property interest in Sead also 

may have diminished.29 LLCs and LLPs: A Wisconsin Handbook, 

§ 4.8. None of these questions can be answered based solely on 

the Amended Complaint. However, our process when faced with a 

motion to dismiss for failure to state a claim begins and ends 

with the Amended Complaint. 

III. CONCLUSION

 

28 Id. 

29 The type of injury alleged would not produce duplicative 

damages, because only one set of damages for the Keidls' 

interaction with Pagoudis is possible. See Jones v. Secura Ins. 

Co., 2002 WI 11, ¶3, 249 Wis. 2d 623, 638 N.W.2d 575. However, 

at this point in the litigation, I cannot determine where the 

ultimate injury occurred. 
No. 2020AP225.pdr

12

¶84 Because the Amended Complaint alleges facts that, if 

proved true, state claims for intentional misrepresentation, 

strict liability for misrepresentation, violations of Wis. Stat. 

§§ 895.446 and 943.20 and false advertising pursuant to Wis. 

Stat. § 100.18 by the Keidls, Pagoudis should be permitted to 

proceed further in developing facts relevant to those claims. 

¶85 Furthermore, as I explained above, such claims 

generally are assignable, but the Amended Complaint does not 

allege that they were assigned to either Sead or Kearns and 

therefore, they likely remain with Pagoudis. And finally, if 

Sead or Kearns are worth less than the dollar amount that 

Pagoudis placed into them due to actions of the Keidls, the 

value of his personal property interests in those entities may 

have been injured. Accordingly, because the possibilities in 

regard to injury and valuation are myriad, I would affirm the 

court of appeals, and I respectfully dissent from the majority 

opinion's dismissal of claims made by Pagoudis and Kearns.
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¶86 REBECCA GRASSL BRADLEY, J. (concurring in part, 

dissenting in part). In the mid-1500s, the Pope commissioned 

Michelangelo to paint a depiction of The Last Judgment in the 

Sistine Chapel. As was customary at the time, Michelangelo 

included nudity in his work. Because the sensibilities of a 

prominent cardinal were offended, the Pope ordered Michelangelo 

to cover the nudity of religious figures. He did, marking the 

beginning of the infamous "Fig Leaf Campaign." The Council of 

Trent scoured Rome in search of nude sculptures, ordering metal 

fig leaves placed over many depictions of genitalia. Recently, 

efforts have been made to restore some of the art to its 

original form.

¶87 On occasion, this court has taken a chisel to statutes 

that have offended some justices' sensibilities. While we may 

employ "tools" of construction, a chisel is not a legitimate 

tool for judges. The legislature writes law and the judiciary 

interprets and applies it. A statute, like a statue, is 

supposed to be viewed in its original form.

¶88 One statute subjected to judicial reshaping is Wis. 

Stat. § 100.18(1) (2019–20). It states, in relevant part:

No person . . . with intent to sell . . . or in any 

wise dispose of any real estate . . . to the 

public . . . or with intent to induce the public in 

any manner to enter into any contract or obligation 

relating to the purchase . . . of any real

estate, . . . shall make, publish, disseminate, 

circulate, or place before the public, or cause, 

directly or indirectly, to be made, published, 

disseminated, circulated, or placed before the public, 

in this state, in a newspaper, magazine or other 

publication, or in the form of a book, notice, 
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handbill, poster, bill, circular, pamphlet, letter, 

sign, placard, card, label, or over any radio or 

television station, or in any other way similar or 

dissimilar to the foregoing, an advertisement, 

announcement, statement or representation of any kind 

to the public relating to such purchase . . . of such 

real estate . . . or to the terms or conditions 

thereof, which advertisement, announcement, statement 

or representation contains any assertion, 

representation or statement of fact which is untrue, 

deceptive or misleading.

§ 100.18(1) (emphasis added). In a series of cases, this court 

has castrated the plain meaning of this statute by taking a 

chisel to the phrase "the public." See generally Hinrichs v. 

DOW Chem. Co., 2020 WI 2, 389 Wis. 2d 669, 937 N.W.2d 37. This 

court has previously held, "a statement that was made to only 

one individual could qualify for the protections afforded by 

§ 100.18," equating a statement directed to "the public" with a 

statement directed solely to a single person who is, as people 

tend to be, a member of "the public[.]" See Below v. Norton, 

2008 WI 77, ¶6, 310 Wis. 2d 713, 751 N.W.2d 351 (citation 

omitted). As I have previously explained in a more thorough 

analysis, a "particularized statement[]" to a single person 

"within the context of . . . [an] ongoing business relationship" 

is not a statement made to "the public." Hinrichs, 389 

Wis. 2d 669, ¶94 (Rebecca Grassl Bradley, J., 

concurring/dissenting). This court's objectively wrong 

precedent should be overturned. See Manitowoc Co. v. Lanning, 

2018 WI 6, ¶81 n.5, 379 Wis. 2d 189, 906 N.W.2d 130 (Rebecca 

Grassl Bradley, J., concurring) ("Reflexively cloaking every 

judicial opinion with the adornment of stare decisis threatens 
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the rule of law, particularly when applied to interpretations 

wholly unsupported by the statute's text.").

¶89 The majority opinion accords with the law except for 

its conclusion that Sead LLC's claim under Wis. Stat. 

§ 100.18(1) survives. See majority op., ¶33. The majority errs 

in holding "the Keidls made a representation to 'the public' by 

making representations in the . . . [Real Estate Conditions 

Report] to a potential buyer, Sead[.]" Id. The plain statutory 

language does not extend to representations made solely to the 

buyer during a private real estate transaction.1 Accordingly, I 

respectfully concur in part and dissent in part. 

 

1 The economic loss doctrine may bar recovery for certain 

misrepresentation claims in this case, but the issue has not 

been argued to this court. See generally Wis. Civil——JI 2400, 

at 4 (2023) (explaining the doctrine "requires transacting 

parties in Wisconsin to pursue only their contractual remedies 

when asserting an economic loss claim").
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